Employment Contracts in Costa Rica

Information on employment law and what a Costa Rican employment contract should include...

An employment contract in Costa Rica can be a written or verbal agreement. Contracts can be for a limited or unlimited time. In the case of limited time contracts, there is a specific time span and/or the contract ends once the work has been performed.

Contracts also vary by the type of “working day”, of which there are two in Costa Rica:

  • Normal Working Days (Jornadas Ordinarias Normales)
  • Special Working Days (Jornadas Especiales o de Excepcion)

Normal Working Days: Normal Working Days for daytime hours can be 8 to 10 hours per day, with a maximum weekly total of 48 hours. Normal Working Days for night-time hours can be up to 6 hours per day but no more than 36 hours per week.

Special Working Days: Individuals who work on Saturdays are considered to be on Special Working Days. Special Working Days also apply to several fields of employment where employees have extended working days. For example, domestic servants can work up to 12 hours a day. Young people between the ages of 15 to 18 are also considered to work Special Working Days. People in this age group are not allowed to work more than 6 hours a day and 36 hours per week.

Employment Contract Provisions

Employment contracts fall under the Costa Rican Labor Law, and thus all have the same set of provisions. If there are violations to the labor rights under the Costa Rican Labor Law, contact the National Work Inspection (Inspección Nacional de Trabajo).

Terminating employment contracts

Both employer and employee are entitled to one month’s notice before termination of the contract. If an employer terminates a contract without good reason, the employee is entitled to one month’s salary for each year they have worked for the employer, up to a maximum of eight years of employment. The one month’s salary is calculated as an average of the salary received during the previous six months of employment.

Social Security

All salaried employees must be registered with Costa Rican Social Security (Caja Costarricense de Seguridad Social). The employer must pay 26 percent of the total salary amount, and an additional nine percent, which is deducted from the employee’s pay. This covers the employee for medical care, hospitalization and other medical costs; three percent of this amount is a contribution to a savings and pension fund.

Wages

Wages in Costa Rica are much lower than in the US and Europe. However, it is important to take into account that the cost of living is far lower as well. Costa Rica has a minimum wage scale revised and published every six months by the Ministry of Labor (Ministerio de Trabajo). Nearly every occupation is covered on the list.

Overtime in Costa Rica is paid at the rate 150 percent of the hourly wage. Every employee in Costa Rica is also entitled to a Christmas bonus (aguinaldo) of one month’s salary. This bonus is paid during the first 20 days of December. The Christmas bonus is calculated as an average of the previous year's salary.

Holidays

In Costa Rica, employees are entitled to two weeks’ holiday for every 50 weeks of continuous employment. If an employee’s contract is terminated and he/she has not yet used the earned vacation time, they are entitled to a payment of one day’s salary for each month worked during the year.